Tag: introduction of business laws

Questions Related to introduction of business laws

_______means those customs and usages which are binding on traders in their dealings with each other.

introduction of business laws business law and contract act business studies

  1. Similar law

  2. Common law

  3. Principle of equity

  4. Law merchant

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Correct Option: D
Explanation:
Law Merchant in English, is the body of commercial law used by merchants throughout Europe during the medieval period. It evolved similar to English common law as a system of custom and best practice, which was enforced through a system of merchant courts along the main trade routes. It functioned as the international law of commerce. It is the most important source of Mercantile Law.

Which of the following transactions would have no impact on owner's capital?

introduction of business laws business law and contract act business studies

  1. Purchase of land from the proceeds of a bank loan

  2. Withdrawal of profits

  3. Net loss

  4. Cash brought in by owner as additional capital

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Correct Option: A
Explanation:

Purchase of land from the proceeds of a bank loan would have no impact on owner's capital. The entries to be passed on purchase of land are
Cash A/c                                  Dr.
         To Bank Loan A/c On purchase of Land the following entry will be passed-
Land A/c                                 Dr.
         To Cash A/c
Thus no impact on owner's capital

Expenses paid in cash and recorded as assets before they are used are called _____.

introduction of business laws business law and contract act business studies

  1. accrued Expenses

  2. interim Expenses

  3. prepaid Expenses

  4. unearned Expenses

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Correct Option: C
Explanation:

Prepaid expenses are future expenses that have been paid in advance. It can also be said to be costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company's balance sheet as an asset.

A purchased an old computer costing Rs. 10,000 and incurred Rs. 1,000 on its repairs and Rs. 500 on its packing. He sold the computer at 20% margin on selling price. The sales value will be:

introduction of business laws business law and contract act business studies

  1. Rs. 12,500

  2. Rs. 11,000

  3. Rs. 14,375

  4. Rs. 13,800

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Correct Option: C

The main purpose of the corporation sole is to ______.

introduction of business laws business law and contract act business studies

  1. Make the property easily inheritable

  2. Make the property easily transferable

  3. Maintain continuity of an office

  4. Protect the property of the State

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Correct Option: C
Explanation:

The sole purpose of the corporation is to maintain the continuity of an office. Till it is in continuation its all others purposes like maximizing profit, increase in shareholders wealth can be achieved.

When an agreement is discovered to be void, any person who has received any advantage under such agreement ____________.

introduction of business laws business law and contract act business studies

  1. is bound to restore it

  2. is not bound to return it

  3. may retain it

  4. both A and B

Show answer
Correct Option: A
Explanation:

Under section 65 of the Indian Contract Act, 1872, when an agreement is discovered to  be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make  good the compensation received if any, to the person from whom he received it.